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According to the United Nations, food production will need to grow by as much as 70% by 2050 in order to feed the 9.7 billion people that are expected to be living on the planet by then. In order to address this challenge, not only will more food need to be grown and produced, but Food & Beverage (F&B) industry supply chains will also be required to vastly improve efficiencies so that the increased volume of food can be safely processed, stored and delivered.
In order to address the challenges and reap the benefits, current F&B supply chains will need to be realigned and digitized, so that more food can get through the expanding upstream and downstream delivery pipes safely, while conforming to regulatory policies.
Reevaluating F&B supply chain digitization
Digitization, the use of digital technologies to change a business model and provide new revenue and value-producing opportunities, is not a new concept within the domain of the F&B supply chain. In food manufacturing plants, for example, data analytics have been deployed to optimize the performance of packaging lines, historians have been used to record and retrieve production and process data into time series databases, and ERP systems have been connecting to plant floor cells.
However, many of these approaches have involved point solutions across the supply chain that are vertically integrated. The urgent need within the F&B supply chain is for horizontal integration. Upstream of the manufacturing plant, this implies deploying new ways to integrate farm systems, logistics systems, even blockchain-enabled financial trading systems between farms and intermediaries before any raw materials reach the manufacturer. Downstream of the plant, the integration of cold storage, shipping, retail distribution and consumer acquisition information also need to be factored in. New approaches in digitized labeling and product information management (PIM) now allow for consumers to be much more informed about the food they choose to eat and manufacturers can much more profitably control the identification of any food products that may be tainted, even before they reach the shelves.
New-generation digitization tools can help to drive this needed horizontal integration. The business return from these investments starts when plant operators and stakeholders begin to gain wisdom from the new sources of data gathered from both upstream and downstream supply chain collection points. Low cost, non-intrusive sensing devices make this possible. In fact, the lowest-level connected device is extremely important within the context of the horizontal supply chain integration. Upstream data from the farm concerning weather information, soil information, and irrigation system information begins to drive important product quality and quantity forecasting. This information is fed into the inline analytics of the food processing plant as the real-time information is fed to an Artificial Intelligence (AI) system in the cloud. The AI engine then suggests the best actions to take and the best decisions to make given the variable circumstances.
Business and regulatory benefits
In the highly integrated, connected and digitized supply chain, transparency and increased visibility become critical success factors, not only to accrue productivity and efficiency gains, but to also address issues of regulatory compliance. The importance of brand reputation is now compounded in an era of mobile communications and social media. If a regulatory recall or audit is required, the organization in question needs to be efficient in tracking both upstream and downstream supply chain processes, if damage to brand equity is to be avoided or minimized.
Improved regulatory compliance is a by-product of horizontal digitization. The practical business benefits of digitization-driven traceability include supply chain optimization, publishable carbon footprint improvement, maximization of yield from raw materials, and minimization of losses and waste.
To learn more about how new digitization tools are providing F&B horizontal supply chain linkages, visit our new smart supply chain Web site.